Lessons Learned in Mondragon: Knowledge Makes You Free & Inter-cooperation is Key By Jihan Gearon

This past spring I was lucky enough to attend a week-long seminar and tour about cooperatives in Mondragon, Spain. I didn’t know much about Mondragon or cooperatives before I went. I thought cooperatives were small hippie farms, that Basque Country was full of sheepherders, and that Arizmendi was a bakery in San Francisco. But I wanted to learn and was excited to learn from the understood experts at MONDRAGON Corporation. I left with a lot of thoughts and even more questions. But I can share what I learned about cooperative development, especially those pieces I think are important and potentially applicable to the Navajo Nation. First, some…

 

 

OtaloraBACKGROUND

We stayed in Mondragon, Spain, which is in Basque country. In the Basque language, the town is named Arrasate. The Basque people are indigenous to the Pyrenees and their territories straddle Spain and France. Since the Basque language is completely unrelated to Spanish or other Indo-European languages, it’s thought to represent the people and culture that occupied Europe before the spread of Indo-European languages. Both the Spanish and French governments have tried to assimilate and suppress the Basque people, their language, and their culture. And much like Navajos this has created a strong nationalist pride and desire for self-determination and sovereignty. Which I think was an important foundational piece in the development of the cooperatives.

The MONDRAGON Corporation was founded in 1956 by a Catholic priest named José María Arizmendiarrieta. Arizmendiarrieta (aka Arizmendi aka The Priest) is a big hero in the local community. His name, image and words are everywhere and he continues to be an inspiration to the region and members of the cooperatives. Arizmendiarrieta arrived in Mondragon in 1941. The fact that the region was still suffering from the Spanish Civil War pushed Arizmendiarrieta to focus his support on economic development.

Today MONDRAGON Corporation is composed of 260 centers including 103 cooperatives. It employs 70,000 people worldwide, supports 257 businesses and cooperatives, and made over 12.5 million euros in 2013. Its headquarters is in Mondragon, which is one of nine towns in the regional valley. 65,000 people live in this valley and 50% work in cooperatives. 22,000 people live in the town of Mondragon and 60% work in cooperatives.

 

KEY LESSONS LEARNED

Mondragon TableJust creating jobs won’t work.

The image of a table was referenced throughout our lessons to help us visualize how the different pieces of MONDRAGON work together. In this image various cooperatives are connected on top of the table. The four essential legs that support the cooperatives represent education, social services, finance, and research and development. During our seminar we spent our days visiting and speaking with staff and workers from each component of the table. We visited:

  • Otalora, the cooperative and management training center
  • Fagor Industrial, which designs and produces equipment for the hotel, catering, laundry, and refrigeration sectors
  • Ikerlan, research and development center
  • Laboral Kutxa, the credit union
  • Mundukide, an NGO supporting projects in developing countries
  • Saiolan, an incubation center
  • Lagun Aro, which runs the health and social welfare system
  • The Basque Peace Secretary
  • Basque Culinary Center
  • Mondragon Innovation and Knowledge Research Center

What became apparent to me was that simply creating jobs, a singular business, or even several businesses, does not an economy make. Let alone an economy that values people over profits. Interconnecting, balanced, and stable support systems are also extremely important for long-term success.

A culture of inter-cooperation is key.

Arizmendiarrieta started his work to bring jobs and economic development to the region by establishing a school, open to and supportive of all young people, in 1943. It had two goals: 1) to provide technical knowledge for emerging industries and to 2) instill the concepts of solidarity and participation in economic development. His second step was, despite having no experience in doing so, to start a bank. He used the simple image of a suitcase to compel a choice of community members. Either they put their savings in his bank, which would allow them to have a job in a co-op in their community. Or, they pack their suitcase and leave, because there were no other job opportunities at home.

These two acts created a workforce of local youth, educated them in emerging industries, bypassed the need for outside investors, pooled money for the creation and support of the first cooperatives, and allowed community members to stay home. Most importantly it created a foundational culture of inter-cooperation among the cooperatives, their workers, and the community – everyone’s futures were dependent on each other’s success. Today, you see the principle practiced in many ways. For example, each cooperative must contribute 15–40% of its gross profits to the Investment, Education, and Solidarity Funds. Beyond these institutionalized requirements for inter-cooperation, there is a general comradery among workers. It seemed very common for workers in one cooperative to vote for a temporary pay cut in order to support workers in another cooperative.

circleWorkers matter most.

The basic premise of the cooperatives is that while in conventional, capitalistic companies power is given to capitol (money) while labor (people) is used as a resource to make capitol. In the cooperative companies of MONDRAGON power is given to labor and capitol is used as a resource to support labor. In other words, the goal isn’t to make lots of money. The goal is to provide good livelihoods for people in the community.

LagunAro provides a direct social protection system for coop members. It includes things like retirement, healthcare, sick leave, unemployment, etc. Because workers in cooperatives are also owners of the cooperatives, they couldn’t legally use Spain’s social security and public welfare system. So they created their own. They enjoy exceptional healthcare, maternity leave, and vacation time (six weeks!). Most can retire at ~65 years and for cooperatives that close, people can retire at 55.

The principle of valuing every worker is also reflected in the structural practice of the coops. For example, pay structures do not create haves and have nots. The highest salary in a coop can’t be more than 7.5 times the minimum salary, and individual coops can choose to make that even smaller. So for instance, if the lowest paid employee has a yearly salary of $15,000, the highest paid employee can’t have a salary above $112,500.

Participation is a duty and a right.

Participatory management is one of the ten principles of the MONDRAGON Corporation. It means: the steady development of self-management and, consequently, of member participation in the area of company management which, in turn, requires the development of adequate mechanisms for participation, transparent information, consultation and negotiation, the application of training plans and internal promotion.

The coop in fact, requires your participation. Each member has a vote in the future of their coop, and is required to attend a yearly general assembly. There are also various directors, boards, and councils that play ongoing governing, watchdog and advisory roles on behalf of their larger membership. And if you are elected a representative member, for example on the Governing Council, you have to attend meetings but are not paid extra for it. So it takes effort and a commitment to be a member of a cooperative. In order to even be offered the position of member, you have to be a worker for up to three years. And it costs 15,000 euros.

But simultaneously, you are supported to become a member. For example, there are payment plans. A single person can have three years to pay off membership. And a person with more expenses, like a family, a mortgage, etc., can have 15 years to pay with only about 0.2% interest. The cooperative wants to support more members.

View from headquartersInvest in education and entrepreneurship.

Remember that from the beginning, Arizmediarrieta believed the education of young people was of utmost importance to the development of the region’s economy. His priority continues today with a strong emphasis on education and entrepreneurship, based on emerging industries. This is important too because there is a concern that the newest generations weren’t creating new coops and businesses, and weren’t growing what the previous generations began. Over 80% of existing coops were created by the parents’ and grandparents’ generations. So both incubation centers and universities are really excited to teach “regular people” how to learn by doing. I was really excited to learn about the Team Academy at Mondragon Innovation and Knowledge research center at Mondragon University.

The Team Academy was created with the goal of renewing the entrepreneurial spirit and capacity of creation in Mondragon. Students in this academy are called teampreneurs. The first week at school, they are split into groups of about 15, given a small amount of money, and tasked with creating a real coop. It is important that the teams reflect diversity in leadership strengths, so they know how to work with other people, and personality tests are used to determine teams. The faculty doesn’t lecture so much as act as advisors in the development of the coops. The assigned reading of two books per month compliment the business idea. And also, students are required to travel abroad for several months at a time to learn about business development and entrepreneurship. The success of this coop throughout their education is the biggest factor in their graduation and they are graded as teams, not individuals.

And let’s not forget that all eight of the schools in Mondragon University are also cooperatives. This means, very unlike schools here at home, students have the power to make real decisions concerning their education. Students, workers, and collaborators and partners are all voting members of the school cooperatives. In the case of the K-12 Arizemendi School, parents are members instead of students. It was hard to imagine being able to make decisions about tuition, investments, etc. as a student.

Work to heal collective trauma.

We were lucky enough to meet with Jonan Fernandez, the Director of the Basque Department of Peace. The Department of Peace was created to address the turmoil and trauma from the recent civil war and acts of the ETA, a Basque terrorist organization. The goal of this department is to manage the pain from the past. It encourages citizens to speak about the past and it’s impacts, recognizes the plural ways the past can be interpreted, and tries to find a shared assessment.

It’s identified specific key areas that create conflicts and the breakdown of co-existence: dogmatism, fatalism, Manichaeism, and sectarianism. It’s also furthered its education to four key areas: education in limitation, education in positive values, education in ethical conscience, and education in human dignity. Each of these areas can be deeply discussed but two ideas in particular stuck with me. First is the importance of combating Manichaeism, which puts everything in terms of black and white, right and wrong. It makes it easy for people to throw their hands up and check out rather that make real, nuanced decisions in the gray areas. The second thing that stuck with me is the positioning of human dignity above all else.

Can you imagine the impact of a Navajo Nation Department of Peace? Though I guess in our case it would be a Navajo Nation Department of Hozho.

FINAL REFLECTIONS

There are many similarities between Mondragon’s initial circumstances and the Navajo Nation’s current reality. We consistently hover at 50% unemployment. Our young people are forced to move far from home for work. Our culture, language and way of life are consistently under attack. True investment in our communities is rarely seen. And we are divided in many ways – just one result from very real historical trauma. I believe there is a lot we can learn from Mondragon’s success in demonstrating a better form of capitalism, a form of capitalism that values people over profits. And their path over the years reflects what I imagine as important components in a just transition for the Navajo Nation – a collective commitment to face difficult issues head on, and to make decisions that are based in both long-term vision and current reality.

But before we do all this, we need to very clearly and collectively answer: when does a better form of capitalism become too close to capitalism? I was surprised to see how industrial the coops were. MONDRAGON Corporation builds bridges, contributes components to mining industries, has factories in developing nations, and invests in global financial markets. While only 2% of people in the coops work in the agricultural sector. My instructors pretty much laughed when I asked for advice on wool or food production. “Tractors don’t really work here because of the steep hills,” they dismissed. I’m sure MONDRAGON’s practices are much better than your traditional profit driven corporation. But the point is, they still have to exist in a capitalistic world. And we are faced with the same dilemma.

So, when does a better form of capitalism become too close to capitalism? And what are the things that indicate to us that we’ve gone too far? I imagine our opinions, as individual Dine people, are a lot less black and white as one might assume. And as we ponder that question collectively, Mondragon still provides many concrete examples of how to build our economic power. As for myself, as an Executive Director of a non-profit organization, I’ll be promise to incorporate these lessons into our organization’s structure and work.

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